The Dilemma of Transferring Property
As we age, the question of how to manage our assets, particularly our homes, becomes increasingly important. A common concern is whether to transfer the ownership of a house to children to avoid potential issues such as nursing home costs or government claims. However, this approach is not without its pitfalls.
The Risks of Direct Transfer
Transferring your house directly to your children can create significant tax implications. For instance, if a house purchased for $5,000 decades ago is now worth $500,000, transferring it directly to your children could result in a substantial capital gains tax bill based on the difference. This tax burden can be avoided through inheritance methods such as wills, deeded transfers at death, or trusts.
The Perils of Losing Control
Another risk of transferring property to your children is the loss of control over the asset. If your child or their spouse faces legal troubles, bankruptcy, or divorce, your property could be at risk. It’s crucial to maintain control over your property while still planning for its future transfer.
The Solution: Lady Bird Deed
A Lady Bird Deed, also known as an enhanced life estate deed, offers a solution. This tool allows you to retain control of your property for the rest of your life, with the property automatically passing to your chosen beneficiaries upon your death, avoiding the probate process.
Benefits of a Lady Bird Deed
- Control and Protection: You maintain complete control over your property until your passing.
- Avoiding Probate: The property passes directly to your beneficiaries, bypassing the probate process.
- No Lookback Penalties: Unlike direct transfers, a Lady Bird Deed does not trigger lookback periods for Medicaid or VA benefits, as you’re not relinquishing ownership.
Availability and Legal Consultation
The Lady Bird Deed is not available in all states, but it is a valuable tool in places like North Carolina. To understand if this is the right option for you, it’s advisable to consult with an estate planning attorney.
Free Consultation Offer
For those interested in exploring their estate planning options, including the use of tools like the Lady Bird Deed, a free consultation is available. You can schedule this by visiting mcelderlaw.com/scheduling or calling 1-888-999-6600.
In conclusion, while the idea of transferring property to children might seem appealing to protect assets, it’s essential to consider the implications and alternatives. Tools like the Lady Bird Deed offer a way to protect your property, avoid unnecessary taxes, and ensure your assets are passed on according to your wishes, all while maintaining control during your lifetime.
Greg McIntyre & Brenton Begley
Estate Planning & Elder Law Attorneys